Description
An RVO enters into a contract to acquire a service, for example, electricity from an energy company. The RVO assumes the role of an electricity retailer, and on-supplies the electricity to the residents of ILUs under separate contracts. 2. The energy company invoices the RVO for the electricity supplied to the retirement village. 3. The RVO charges individual residents for their use of electricity at a rate equivalent to that charged by the energy company. 4. The RVO treats its supply of electricity to residents as a taxable supply, separate from its input taxed supply of residential accommodation. On this basis, it claims input tax credits (or decreasing adjustments) on certain of its acquisitions, including infrastructure costs for such things as wiring and sub-stations, which it claims relate to the taxable supply of electricity. 5. Further, the RVO claims as input tax credits a higher percentage of its costs for its general acquisitions relating to the operation of the retirement village than it might if it were not making the purported taxable supplies of electricity. 6. This arrangement may replace existing contracts for a direct supply of electricity from the energy company to village residents or may be in place from the beginning of the village's operation. 7. The RVO may also supply other services to village residents under similar contracts. 8. The basic features of the arrangement can be summarised diagrammatically as follows. (The 'before' aspect is absent for villages that are set up under this arrangement from their inception):